The HR Challenges of Virtual Companies

I ran across an interesting little article entitled Are Office-Free Companies the Future of Business? Marissa Brassfield of PayScale.com profiles a small company where ALL 123 employees work from home. Additionally, the employees of this company are spread across the globe. She talks about the advantages, which are many, and one disadvantage of people missing the contact of other employees. She made me think, in addition to these issues what are the HR challenges of virtual companies?

Advantages of virtual companies

There are a number of management advantages, such as 24/7 productivity that exist in virtual companies, at least those that have a global presence. What I want to consider here are the several HR advantages to having a virtual company. These include:

A worldwide talent pool– Your ability to attract talent is summed up in the old saying “The world is your oyster.” Talented people abound in Asia, Africa, Europe, Australia, South America and, of course, North America. You just need to identify what talent is needed and then cast the appropriate net.

Blended compensation costs– Not every employee will require the same compensation, based upon the country in which the work. Ultimately this may cost the company less than if all the work was done in a single company.

The Challenges

Being an HR guy I can see a number of challenges that would need to be overcome to be successful as a virtual company:

Establishing a virtual onboarding process – Making sure a new employee is welcome and making sure all the appropriate documents are collected for company purposes and for local jurisdiction purposes.

Assessing a candidates ability to work virtually– There are assessment tools that will help with this, the challenge may be finding ones that have overcome cultural and language barriers.

Complying with a myriad of legal compliance issues, compounded in a global company -What are the employment laws, compensation laws, etc. that you must be compliant with? In the U.S. alone understanding state differences can be daunting.

Balancing compensation throughout the company– This requires translating positions into local pay so there is some equity in the employee’s country and then insuring internal equity within the company.

Promoting employee engagement and teamwork– In a multi-cultural, multi-lingual organization how to you make an employee feel part of the company or part of a team? Managers need to be very, very well trained.

Conducting virtual terminations– Let’s be honest, not everyone is going to work out in this virtual company. How do you meet with someone to end their employment? Are you complying with all local laws about notification and consideration? How are you safeguarding the company’s intellectual property during this period? What about equipment? What about relationships?

These are just some of the challenges I see. I am certain there are many of you out there that have already faced these challenges. I would like to hear from you. What else have I missed? Which of these is the greatest challenge?

Omega HR Solutions is a virtual company. Not originally, but we have morphed into one. We think it is the way to go. But as to them being the future of business as a whole? I think so if your product is intellect. I think not if your product is something held in your hand.

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About Mike Haberman

I have been in human resources for over 30 years, both as a practitioner and consultant. I am known as "THE HR COMPLIANCE GUY" and as an HR Futurist. I was named an "Influencer" to IBM's New Way to Work panel.

I co-founded Omega HR Solutions in late 2000, beginning operations January 2001. I am a senior HR consultant. I am also an instructor at the University of Georgia School for Professional Education teaching human resources management. Additionally, I present numerous webinars on a monthly basis.

My blog has been published over 10 years and I write for two other sites as well, Workology (formerly Blogging4Jobs) and eSkill. I have been a certified Senior Professional in Human Resources (SPHR) for over 20 years and I have been certified as SHRM-SCP from day one.

With my background, knowledge and experience I help guide companies through compliance issues today and help them prepare for the world of work tomorrow.

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